As the mid-point of the 2020 Australian winter crop season passes, there is firming confidence in the volume of Australia's barley crop - and the task of working out where it will be sold is now getting serious.
After recent years of drought, thinking about 'finding homes' for Australia's barley production should be a delight.
But with China's 80.5 per cent tariff now in place, it is instead a 'find and replace' challenge.
The Australian Bureau of Agricultural and Resource Economics (ABARES) and the US Department of Agriculture (USDA) have forecast that Australia will produce more than 10 million tonnes of barley this season.
With 'typical' domestic consumption of about 2.5 million tonnes of feed barley and 1.3 million tonnes of food and malting grade barley, a crop in the order of 10.3 million tonnes would leave about 6.5 million tonnes in surplus.
In 2016-17, Australia exported 9 million tonnes and the average for the five years before 2018-19 - and before consecutive droughts in Australia - was 5.5 million tonnes.
This indicates 6.5 million tonnes could be 'homed' fairly easily.
But, during this time, Chinese purchases from Australia averaged 4.5 million tonnes annually - and there is no simple 'find and replace' for China.
Looking to Middle Eastern markets is an obvious option.
Saudi Arabia imports about 7 million tonnes of feed barley annually, but even in 2016-17 - when Australia exported more than 9 million tonnes of barley - just 304,000 tonnes was sold to Saudi Arabia. The last time we shipped more than 1 million tonnes to Saudi Arabia was in 2013-14.
More corn and increased Black Sea and eastern European barley has filled the Saudi feed-grain deficit, illustrating the price sensitivity of the Saudi feed grain market.
With lowered expectations for Romanian and Russian barley production, competitive pricing might move 1.5 million tonnes of Australian barley to Saudi Arabia this year - and perhaps 1.7 million tonnes could go into the broader Middle East region.
Thailand is another feed grain market with promise. It is estimated to have imported about 600,000 tonnes in 2019-20 and - with drought reducing its local feed supply - this is expected to increase in 2020-21, so that Australia might be able to capture about 750,000 tonnes.
Together with typically supplying Japan with about 800,000 tonnes, and shipping 250,000 tonnes each to Vietnam and across the rest of Asia, the Asian region might be a market for about 2 million tonnes.
Exporting malting barley to Chinese special export zones, where re-export of the barley transformed to malt would exempt it from the 80.5 per cent tariff, might offer a market for another 450,000 tonnes.
If Australian maltsters can capture some of the malt sales that are usually supplied by Chinese malt made from Australian barley, there is also a small opportunity.
Also at home - and with feed barley prices running at 10-year high discounts to wheat - the use of barley in livestock rations will soak up some extra tonnes.
Rebuilding stocks here on the east coast after drought will capture some of the surplus, and increased on-farm storage is likely be a material part of this rebuild.
But there is no escaping the fact that the 'find and replace' for China will be: challenging; focused on feed grain markets; leave substantial stocks of grain here; and put pressure on prices in the coming year.
Rabobank's current forecast for 2020-21 barley production is closer to 9 million tonnes, a level that makes the 'find and replace' easier - but still with a bearish outlook for prices.
